USD/JPY Signal Update
Yesterday’s signals gave us a price action long entry following the bounce off 102.60. On the hourly chart, there was a bullish engulfing bar that would have given an entry at about 102.80. Unfortunately, as this happened, the 102.80 level was in the process of turning into resistance as the broken trend line there has become bearish again and the price has been unable to really penetrate above that. The trade was stopped out a little while ago for a loss of 0.50%.
Today’s USD/JPY Signal
Risk 0.75%.
Entries must be made before 5pm London time.
Long Trade
Enter long following the first next bar break of any bullish pin or engulfing hourly candle after a first touch of 102.25. From one hour following the close of the first hourly candle that closes below 102.25, this trade is invalidated.
Put a stop loss 1 pip below the local swing low.
Move the stop loss to break even when the price reaches 102.49. Take 90% of the position as profit at 102.75 and leave the remainder to run.
Short Trade
Enter short following the first next bar break of any bearish pin or engulfing hourly candle after a first touch of 102.80. From one hour following the close of the first hourly candle that closes above 102.80, this trade is invalidated.
Put a stop loss 1 pip above the local swing high.
Move the stop loss to break even when the price reaches 102.52. Take 75% of the position as profit here and leave the remainder to run.
USD/JPY Analysis
Yesterday we reached a key supportive level at 102.54 which gave a rally of a little less than 30 pips. The local bearish trend however was too strong and this rally has been wiped out. In this process two significant technical developments occurred: firstly, we were unable to rise back beyond the broken bearish trend line, so this may have become an effective trend line again containing the price. Confluent with that trend line, the previously supportive level at 102.80 now looks to have flipped to become resistance.
We have now flipped support to resistance twice in a row and broken back below a trend line. These are significant bearish developments and my bias is now bearish. Despite that, I am prepared to look for a long at around 102.25, which is confluent with today’s GMT S2 daily pivot point level, but would be very conservative with taking profit there.
Should we return back to 102.80, this should be a good level at which to look for a short, where I would be a little more aggressive with profit targets.
A candlestick analysis of the higher time frames reveals a bearish picture: bearish on the monthly and daily, and neutral on the weekly.
I am not discounting that we may still find support this morning at around 102.50 which is confluent with today’s GMT S1 daily pivot point level.
There are no important data releases scheduled today concerning the JPY. However there are three high-impact data releases concerning the USD that will occur simultaneously at 12:30pm London time: Core Retail Sales, Retail Sales, and Unemployment Claims. This is likely to mean that things will probably be quiet until around Noon London time when this pair should get more active.